Will push for support on tighter rules on posted workers

France's Macron, seeking to re-shape Europe, heads east

FILE PHOTO French President Emmanuel Macron waits for a guest at the Elysee Palace in Paris, France, June 28, 2017. Picture taken June 28, 2017. REUTERS/Charles Platiau/File Photo.

Reuters

PARIS/WARSAW: While Britain toils over its messy divorce with the European Union, France's president Emmanuel Macron is embarking on a drive to deepen the economic integration of a bloc he says needs to be more protective of its citizens.

The French leader this week embarks on a three-day tour of central and eastern Europe, where he will seek to win backers for his push to tighten labour rules over 'posted' workers, a sensitive issue that has exacerbated an east-west rift.

Days later, euro zone reforms, defence cooperation and immigration will be in focus when Macron hosts the leaders of Germany, Spain and Italy for talks, as he seeks to enhance France's leadership in Europe.

Paris has long complained that central and eastern Europe gains an unfair advantage from the "social dumping" of cheap labour, arguing the posting of low-paid workers hurts local jobs and erodes labour protections in higher-wage member states.

Although posted workers make up less than 1 percent of the EU workforce, with many employed in the haulage and construction sectors, the issue has deepened a divide between the poor east and rich west.

Macron will visit Romania, Bulgaria and Austria, where he will also meet the leaders of Czech Republic and Slovakia, but is skipping Hungary and Poland, whose right-wing governments he has accused of spurning the bloc's values.

An Elysee Palace source said Macron was visiting countries who were "the most attached to their European anchoring".

The source dismissed suggestions that Macron is seeking to drive a wedge between central and eastern European countries staunchly opposed to reform and those that see scope for compromise.

"This is not about dividing in order to better rule," the source said in a briefing to reporters earlier this month.

DIVISIONS

Macron's election win has re-energised the EU's Franco-German axis but in Poland and Hungary it has fanned fears of a "multi-speed" Europe that could mean reduced influence, financial support and economic competitiveness.

The 39-year-old leader will find a sympathetic ear in Austria, which borders four eastern European countries and where the ruling Social Democrats say an influx of workers from the east is weighing on wages.

The posted workers directive permits European companies to send employees to other EU states on contracts under which they only have to guarantee the minimum wage of the host country.

Macron has said a European Commission proposal that posted workers' pay packets should include benefits in line with host country regulations and that their contracts be limited to two years does not go far enough.

Poland, Hungary, Slovakia and the Czech Republic -- known together as the Visegrad four -- say the proposals go too far. They argue they should be allowed to compete on lower prices to catch up after decades of communist stagnation.

Estonia, which holds, the EU's rotating presidency, is due to table a new proposal in September.

Poland has accused Macron of double standards by advocating a closer Europe while seeking to erode competition in the single market. Two sources in the Polish government said it had tried to invite Macron to Warsaw as part of his trip.

"But we didn't see much willingness," said one of the sources.

Poland's Deputy Infrastructure Minister Justyna Skrzydlo told Reuters the Warsaw government trusted in the "continued unity and solidarity of the Central Europe countries".

"We believe that Central European states highlight competitiveness in the European economy," she said. "We are utterly confident that it will endure in the future."

Other countries have shown signs of being open to compromise and aligning themselves with an eventual new EU proposal.

"I am very much interested in regional cooperation within the Visegrad four, but Slovakia's vital interest is the EU," Slovak Prime Minister Robert Fico.

Beyond the issue of posted workers, Macron is likely to be on a charm offensive to drum up support for proposed wider reforms to the European Union that include deeper defence cooperation, fiscal harmonisation and a common budget for the euro zone.

His advisors say French diplomacy has long neglected central Europe.

"He wants to get started on Europe. The sooner he starts building these relationships, the more political capital he will accumulate to use at a later stage," said Teneo Intelligence analyst Antonio Barroso.